American International Group, Inc. New · NYSE:AIG
American International Group, Inc. New — American International Group — Q1 2015 Earnings Presentation
49 slides from American International Group, Inc. New's earnings presentation, May 12, 2015
Slide 1: American International Group, Inc. Investor Presentation First Quarter 2015
Exhibit 99.1 American International Group, Inc. Investor Presentation First Quarter 2015 May 12, 2015
Slide 2: Cautionary Statement Regarding Forward Looking Information
Cautionary Statement Regarding Forward Looking Information This document and the remarks made within this presentation may include, and officers and representatives of American International Group, Inc. (AIG) may from time to time make, projections, goals, assumptions and statements that may constit
Slide 3: AIG Today
AIG Today A Global Insurance Company Balancing Growth, Profitability, and Risk Unique global insurance franchise serving customers in over 100 countries and jurisdictions Scale, Diversity, and A sustained history of product innovation meeting our customers’ Sustainability risk demands Financial stre
Slide 4: Building Long Term Intrinsic Value
Building Long Term Intrinsic Value Reductions in non-core risk assets Simplifying Improved balance sheet strength Balance Sheet & Multiple sources of liquidity, including insurance subsidiaries and DTA Reducing Risk Well balanced investment portfolio Three year financial targets (book value, ROE, an
Slide 5: A Foundation for Sustainability
A Foundation for Sustainability A Simplified and Significantly De-Risked Balance Sheet (As of Period End) Super Senior CDS Total Assets to AIG 5-Year CDS (bps) ($ in Billions, Notional Amounts) Shareholders’ Equity ~92% ~14% 130 ~54% $15.9 $15.1 5.6x 5.4x 72 60 4.8x 48 $5.1 4.8x $1.2 2012 2013 2014
Slide 6: AIG Consolidated Balance Sheet Selected Highlights
AIG Consolidated Balance Sheet Selected Highlights ($ in Millions, Except per Share Amounts) Dec. 31, 2012 Dec. 31, 2013 Dec. 31, 2014 Mar. 31, 2015 Cash and investments $376,975 $358,669 $357,524 $358,636 Total assets 548,633 541,329 515,581 520,701 Net property casualty reserves 68,782 64,316 61,6
Slide 7: Strong Capital Position
Strong Capital Position Capital Structure Credit Ratings ($ in Billions, Except per Share Data) Total Equity Financial Debt1 Hybrids S&P Moody’s Fitch AM Best $126.4 $129.6 AIG – Senior $124.1 $122.3 A- Baa1 BBB+ NR $5.5 $2.5 $2.4 Debt $9.4 $16.6 $18.8 $16.1 $15.7 AIG Non-Life – A+ A1 A A FSR AIG Li
Slide 8: Financial Flexibility
Financial Flexibility Multiple Sources of Liquidity 1 Insurance Company Distributions AIG Parent Liquidity2 ($ in Millions) ($ in Billions) $11.3 $10,417 $9.8 $8,671 $1,038 $5.0 $4.7 $4,433 $6,761 $4,349 $3,528 $291 $2,853 $6.3 $4,238 $5.1 $2,437 $2,618 $1,496 $800 FY 2012 FY 2013 FY 2014 1Q15 Dec.
Slide 9: Deferred Tax Assets
Deferred Tax Assets Continued Monetization of Deferred Tax Assets As of 12/31/13 As of 12/31/14 Gross Deferred Gross Deferred ($ in Billions) Type Utilization/Expiration Attributes Tax Asset Attributes Tax Asset Utilize against Non-Life Insurance Net Operating Loss Non-Life Companies, Corporate & Ot
Slide 10: Non-Life Insurance Companies – Invested Assets
Non-Life Insurance Companies – Invested Assets 1 Total Cash & Invested Assets as of March 31, 2015 – $119.7 Billion Bond Portfolio – $94.7 Billion – Total Portfolio Composition by Agency Credit Rating Not RMBS Rated <1% AAA CMBS 11% 19% 3% Corporate <B debt CDO/ABS 8% 30% 6% B 2% AA Equities 3% 27%
Slide 11: Life Insurance Companies – Invested Assets
Life Insurance Companies – Invested Assets Total Cash & Invested Assets as of March 31, 2015 – $203.5 Billion1 Total Portfolio Composition Bond Portfolio – $167.8 Billion By Agency Credit Rating By NAIC Ratings Not RMBS Rated 12% <1% AAA AA CMBS 13% 10% 5% CDO/ <B ABS 8% 6% NAIC 1 Corporate A 54% B
Slide 12: Progress on Financial Targets
Progress on Financial Targets ($ in Millions, Except per Share Amounts) Progress on Financial Targets Annual Targets 2015 1Q15 Commentary Through 2017 Target 10+% Growth in Growth of 4% since year-end 2014 was Book Value largely driven by net earnings, including $64.05 $60.69 Per Share, ex. signific
Slide 13: Book Value Per Share Growth
Book Value Per Share Growth Consistent Value Creation for Shareholders Book Value Per Share $77.69 $80.16 $68.62 $11.56 $66.38 $11.75 $12.16 $7.91 $12.57 $7.71 $53.53 $4.34 $10.54 $8.51 $3.42 $58.23 $60.69 $52.12 $45.30 $39.57 Dec. 31, 2011 Dec. 31, 2012 Dec. 31, 2013 Dec. 31, 2014 March 31, 2015 BV
Slide 14: Normalized ROE, Ex. AOCI & DTA
Normalized ROE, Ex. AOCI & DTA* Full Year 2014 First Quarter 2015 Pre-tax After-tax ROE Pre-tax After-tax ROE As reported $9,574 $6,630 8.4% $2,527 $1,691 8.4% Adjustments to arrive at Normalized ROE, ex. AOCI & DTA: Catastrophe losses below expectations (821) (534) (0.7%) (113) (74) (0.4%) Better t
Slide 15: General Operating Expenses
General Operating Expenses Targeting 3-5% of Annual Reduction Through 2017 General Operating Expenses, Operating Basis ($ in Millions) $3,052 $2,993 $3,016 $2,879 $2,784 $25 $28 $24 $11 $20 $418 $408 $434 $407 $423 $376 $368 $355 $365 $369 $2,071 $2,238 $2,206 $2,206 $1,972 1Q14 2Q14 3Q14 4Q14 1Q15
Slide 16: AIG – Returning Capital to Stakeholders
AIG – Returning Capital to Stakeholders ($ in Billions) $35 $77.1 $80.0 Legacy debt reductions $74.7 $73.8 decreased net annual $30 $70.0 interest expense by $26.0 $26.2 approximately $500 $52.1 $1.0 $1.2 $60.0 million 2 since 2012 $25 $6.5 $5.1 $50.0 $3.5 billion increase in $20 share repurchase $1
Slide 17: AIG Consolidated Operating Financial Highlights
AIG Consolidated Operating Financial Highlights Full Year First Quarter ($ in Millions, Except per Share Amounts) 2012 2013 2014 2015 Operating revenues $65,379 $61,524 $61,001 $14,590 Pre-tax operating income: Commercial Insurance 2,215 4,980 5,510 1,462 Consumer Insurance 3,736 4,564 4,474 945 Tot
Slide 18: AIG – A Diverse Customer-Focused Operating Platform
AIG – A Diverse Customer-Focused Operating Platform Total Operating Revenue of $61.0 Billion for FY 2014 Commercial Insurance Consumer Insurance Corporate and Other1 FY 2014 Operating Revenue FY 2014 Operating Revenue FY 2014 Operating Revenue $28.8 Billion, 47% $28.5 Billion, 47% $3.7 Billion, 6% P
Slide 19: Commercial Insurance
Commercial Insurance AIG
Slide 20: Commercial Insurance – Strategy
Commercial Insurance – Strategy Strategic Levers to Drive Shareholder Value Creation Strategic Underwriting Claims Operational Capital Investment Customer Growth Excellence Excellence Effectiveness Efficiency Strategy Strive to be our Grow our Improve our Improve claims Continue Increase capital Inc
Slide 21: Commercial Insurance – Diversified Products and Services
Commercial Insurance – Diversified Products and Services Property Casualty General Liability Aerospace Commercial Automobile Liability Environmental Workers’ Compensation Political Risk Excess Casualty Trade Credit Crisis Management Marine Risk Management Surety Casualty Other Customized Structured
Slide 22: Commercial Insurance – A Market Leader
Commercial Insurance – A Market Leader Superior Sales & Significant Market Positions Underwriting Capabilities #1 commercial insurer in the U.S. with an established and Ranked among the top 10 most preferred commercial growing position in Latin America 2; insurance carriers.1 #1 insurer of Terrorism
Slide 23: Commercial Insurance – Property Casualty Financial Highlights
Commercial Insurance – Property Casualty Financial Highlights Continued Improvement in Accident Year Combined Ratios, As Adjusted Full Year First Quarter ($ in Millions) 2012 2013 2014 2015 Net premiums written $20,348 $20,880 $21,020 $5,047 Net premiums earned 20,848 20,677 20,885 4,931 Underwritin
Slide 24: Commercial Insurance – Property Casualty Product Mix & Geography Shift
Commercial Insurance – Property Casualty Product Mix & Geography Shift Meaningful Remediation of Casualty Lines and Growth Outside of the U.S. Property Casualty Property Casualty Full Year 2010 NPW – $20.2 Billion Full Year 2014 NPW – $21.0 Billion Property 16% Property Casualty 24% Casualty Special
Slide 25: Reserves – Non-Life Insurance Businesses
Reserves – Non-Life Insurance Businesses Business Mix Shifts Away from Long-Tail Casualty Lines and Accelerated Commutation of Legacy Portfolios (Especially 2004 and Prior) Are Expected to Also Reduce Reserve Variability Total Net Reserves $63.1 Billion at March 31, 2015 By Accident Year By Line of
Slide 26: Commercial Insurance – Mortgage Guaranty Financial Highlights
Commercial Insurance – Mortgage Guaranty Financial Highlights Full Year First Quarter ($ in Millions) 2012 2013 2014 2015 Net premiums written $858 $1,048 $1,024 $258 Underwriting income (loss) (137) 73 454 111 Net investment income 146 132 138 34 Pre-tax operating income $9 $205 $592 $145 Delinquen
Slide 27: Commercial Insurance – Mortgage Guaranty Credit Quality of Loans
Commercial Insurance – Mortgage Guaranty Credit Quality of Loans Primary Risk-in-force (RIF) – Mortgage Guaranty Risk Quality Index* $42.8 Billion (As of March 31, 2015) High Quality 2015 2006 5% and Prior 2007 9% 8% Loan with Average Risk 2014 2008 4% 2009 24% 2% 2% 2010 2011 5% Low Quality 2012 20
Slide 28: Commercial Insurance – Institutional Markets Financial Highlights
Commercial Insurance – Institutional Markets Financial Highlights Full Year First Reserves & Stable Value Wraps ($ in Millions) Quarter Assets Under Management 2012 2013 2014 2015 $80,000 $68,449 $68,925 Premiums and deposits $774 $991 $3,797 $146 $70,000 $60,000 Premiums 458 610 432 96 $50,000 $32,
Slide 29: Consumer Insurance
Consumer Insurance AIG
Slide 30: Consumer Insurance – Strategy
Consumer Insurance – Strategy Distinguish Ourselves in the Markets and Products We Choose. Be the Provider of Choice Among Our Target Segments and Channels. Profitability and Information- Focused Operational Investment Customer Capital Driven Strategy Growth Effectiveness Strategy Management Strive
Slide 31: Consumer Insurance – Market Maturity Model
Consumer Insurance – Market Maturity Model Focused Growth Advanced Stage Market Early Stage Market Product Personal Auto & Travel Warranty Life Health Retirement Accident Home Channel Sponsors – including Micro Broad Market/ Career Public Financial Brokers, Banks & Insurance Wholesaling Agency, IFAs
Slide 32: Consumer Insurance – Leading Market Positions
Consumer Insurance – Leading Market Positions U.S. Life and Personal Insurance Retirement Businesses1 Rank U.S. Metric Private Client Group 2014 2013 – 40% of the Forbes 400 Richest Americans 2 2 Total Annuity Sales – 43% of the American Listed on the 1 1 Fixed-Rate Deferred Annuity Sales ARTnews To
Slide 33: Consumer Insurance – Leading Businesses
Consumer Insurance – Leading Businesses Consumer Insurance Operations Continue to Be Recognized for Excellence Globally Market Tools – U.S. Money Week Awards – China AVA Digital Awards – U.S. 2014 Achievement in Customer AIG Travel – China Named Best Travel Earned 4 Platinum Awards in 2015 Excellenc
Slide 34: Consumer Insurance – Overview
Consumer Insurance – Overview Premiums and Deposits1 Pre-Tax Operating Income Full Year 2014 – $41.3 Billion Full Year 2014 – $4.5 Billion Life 12% Life 13% Personal Retirement Personal Retirement Insurance 78% Insurance 58% 30% 9% 1) Premiums and deposits include net premiums written for the Person
Slide 35: Consumer Insurance – Retirement Financial Highlights
Consumer Insurance – Retirement Financial Highlights Full Year First Quarter ($ in Millions) 2012 2013 2014 2015 Premiums and deposits 1 $16,159 $23,788 $24,077 $5,522 Premiums 120 188 287 46 Policy fees 743 861 1,010 264 Net investment income 6,502 6,628 6,489 1,570 Other income 1,344 1,754 1,998 5
Slide 36: Consumer Insurance – Retirement – Base Yields and Spreads
Consumer Insurance – Retirement – Base Yields and Spreads Base Yields 1 5.35% 5.25% 5.11% 5.15% 5.06% 5.03% 4.99% 4.95% 5.11% 5.00% 4.96% 4.92% 4.92% 4.75% 1Q14 2Q14 3Q14 4Q14 1Q15 Cost of Funds 2 3.50% 3.03% 3.02% 2.99% 2.98% 2.97% 3.00% 2.50% 2.85% 2.83% 2.81% 2.80% 2.78% 2.00% 1Q14 2Q14 3Q14 4Q14
Slide 37: Consumer Insurance – Retirement – Individual Variable Annuities
Consumer Insurance – Retirement – Individual Variable Annuities Account Value by GMWB Guarantee Industry Retail Variable Annuity Sales* at 3/31/15 1 – $32.4 Billion Full Year 2014 Full Year 2013 % Company Change Rank Sales Rank Sales ($ in millions) Jackson National 1 23,070 10% 1 20,931 Lincoln Fin
Slide 38: Consumer Insurance – Life Financial Highlights
Consumer Insurance – Life Financial Highlights Full Year First Quarter ($ in Millions) 2012 2013 2014 2015 Premiums and deposits $4,864 $4,862 $4,806 $1,223 Premiums 2,804 2,737 2,679 708 Policy fees 1,370 1,391 1,443 363 Net investment income 2,283 2,269 2,199 542 Total operating revenues 6,457 6,3
Slide 39: Consumer Insurance – Personal Insurance Financial Highlights
Consumer Insurance – Personal Insurance Financial Highlights Full Year First Quarter ($ in Millions) 2012 2013 2014 2015 Net premiums written $13,302 $12,700 $12,412 $2,915 Net premiums earned 13,103 12,377 11,970 2,799 Underwriting income (loss) (278) (187) 5 (89) Net investment income 477 455 394
Slide 40: Appendix – Non-GAAP Measures
Appendix – Non-GAAP Measures 40
Slide 41: Glossary of Non-GAAP Financial Measures
Glossary of Non-GAAP Financial Measures AIG We use the following operating performance measures because we believe they enhance the understanding of the underlying profitability of continuing operations and trends of our business segments. We believe they also allow for more meaningful comparisons w
Slide 42: Glossary of Non-GAAP Financial Measures (continued)
Glossary of Non-GAAP Financial Measures (continued) AIG Normalized Return on Equity, Excluding AOCI and DTA further adjusts Return on Equity – After-tax Operating Income, excluding AOCI and DTA for the effects of certain volatile or market related items. Normalized Return on Equity, Excluding AOCI a
Slide 43: Glossary of Non-GAAP Financial Measures (continued)
Glossary of Non-GAAP Financial Measures (continued) Commercial Insurance: Institutional Markets; Consumer Insurance: Retirement and Life Pre-tax operating income is derived by excluding the following items from pre-tax income: changes in fair values of fixed maturity securities designated to hedge l
Slide 44: Non-GAAP Reconciliation – Operating Revenues and General Operating Expenses
Non-GAAP Reconciliation – Operating Revenues and General Operating Expenses Full Year First Quarter Total Operating Revenues 2012 2013 2014 2015 (In Millions) Total operating revenues $65,379 $61,524 $61,001 $14,590 Reconciling Items: Changes in fair values of fixed maturity securities designated to
Slide 45: Non-GAAP Reconciliation – Premiums and Deposits
Non-GAAP Reconciliation – Premiums and Deposits Retirement Full Year First Quarter ($ in Millions) 2012 2013 2014 2015 Premiums and Deposits $16,159 $23,788 $24,077 $5,522 Deposits (16,314) (23,749) (23,957) (5,650) Other 275 149 167 174 Premiums $120 $188 $287 $46 Life 2012 2013 2014 2015 Premiums
Slide 46: Non-GAAP Reconciliation – Pre-tax and After-tax Operating Income
Non-GAAP Reconciliation – Pre-tax and After-tax Operating Income Full Year First Quarter Pre-tax and After-tax Operating Income 2012 2013 2014 2015 (In Millions, Except Per Share Data) Pre-tax income from continuing operations $2,891 $9,368 $10,501 $3,776 Adjustments to arrive at Pre-tax operating i
Slide 47: Non-GAAP Reconciliation – Book Value Per Share and Return On Equity
Non-GAAP Reconciliation – Book Value Per Share and Return On Equity Book Value Per Common Share ($ in Millions, Except Per Share Dec. 31, 2011 Dec. 31, 2012 Dec. 31, 2013 Dec. 31, 2014 Mar. 31, 2015 Data) Total AIG shareholders’ equity (a) $101,538 $98,002 $100,470 $106,898 $107,979 Less: Accumulate
Slide 48: Non-GAAP Reconciliation – Accident Year Combined Ratio, as Adjusted
Non-GAAP Reconciliation – Accident Year Combined Ratio, as Adjusted Full Year First Quarter Property Casualty Accident Year Combined Ratio, As Adjusted 2012 2013 2014 2015 Loss ratio 80.5 71.9 71.6 68.1 Catastrophe losses and reinstatement premiums (10.9) (3.4) (2.9) (1.4) Prior year development net
Slide 49: American International Group, Inc. (AIG) is a leading global insurance organization
American International Group, Inc. (AIG) is a leading global insurance organization serving customers in more than 100 countries and jurisdictions. AIG companies serve commercial, institutional, and individual customers through one of the most extensive worldwide property-casualty networks of any in
American International Group — Q1 2015 Earnings Presentation on 6ix